While a strong domestic economy and political turmoil dominated the television news cycle, artificial intelligence, Blockchain, and two-day deliveries played a starring role in supply chain discussions in 2019. Here’s a look at what’s in store for the year ahead.
Key Trends in Shipping
- Dwell Time
Reducing dwell time was a key focus in 2018 when capacity was tight, but a strong economy and increased capacity has made the issue less of a priority for some shippers this year. Consequently, dwell time has been creeping back up. Although this is a frustrating issue for drivers and carriers, the burden eventually falls back on shippers. When detained drivers are late for subsequent appointments or must cancel altogether, they lose out on revenue. Carriers ultimately pass these excess costs of doing business with undesirable facilities back to the shipper in the form of higher rates.
To avoid the dwell time problem, shippers should work to improve the driver experience by communicating proactively with drivers and regularly soliciting their feedback. Using drop trailers enables drivers to leave loads at shipper facilities and schedule convenient pickups during slower times. And 3PLs with real-time visibility into loading dock congestion can warn carriers of bottlenecks and work with shipper facilities to move things along.
- Trade Policy Uncertainty
The U.S. trade war with China continues to affect supply chains, consumers, and the global economy. Substantial tariffs on Chinese goods has made long-term planning difficult for U.S. shippers, who are struggling to make complex adjustments to supply chains with minimal notice. Unsure about the number of trucks needed in the new year, fleets have begun ordering for the short term and putting off long-range planning and investments. This will likely cause budgeting and re-forecasting challenges for shippers in 2020 (Logistics Management).
- Truck Capacity Rebalancing
2019 was a difficult year for the trucking industry, with many companies closing their doors. Responding to the capacity constraints that prevailed in 2018, too many carriers acquired too many assets, swinging the pendulum in the other direction to create overcapacity conditions. Unfortunately, overcapacity should continue into the first half of 2020. Tractor orders may decline alongside production and sales as the industry works to rebalance supply with demand. Unless the trade war escalates further, a midyear recovery could provide relief for carriers (DC Velocity).
- The 3 E’s: E-commerce, Energy, and ELDs
DAT Solutions has identified e-commerce, energy, and electronic logging devices (ELDs) as three key issues impacting shipping trends. Greater consumer buying power and desire for fast, last-minute and last-mile deliveries will continue to reshape e-commerce supply chains. And while reduced domestic energy production has decreased demand for flatbed trucking, Chevron and Exxon announced new investments that may drive greater long-term demand.
Not to be left out, ELDs are back on truckers’ minds with another deadline on the horizon. Previously grandfathered, Automatic On-Board Recording Devices, or AOBRDs, must be replaced with ELDs by December 16, 2019. As of last summer, more than half of all class 8 trucks still used AOBRDS. Because ELDs require retraining, the same driver retirements that contributed to tight capacity in 2018 could return in 2020 (Fleet Owner).